Many couples who are divorcing struggle with the idea of giving up the family home, especially if they have school-aged children or have owned the property for many years. Unfortunately, it is often challenging for either spouse to afford the mortgage and upkeep alone after splitting.
These are the factors to consider when deciding whether to sell the family home during divorce proceedings.
Community vs. separate property
Under California divorce laws, the courts divide marital property equitably when a couple ends the marriage. All property is considered marital except assets that belonged to one spouse before the marriage and/or gifts and inheritances received by only one spouse during the marriage. If you purchased the house before the marriage but your spouse made payments toward mortgage and upkeep, the property belongs to both of you except for your initial down payment amount.
Options for keeping the home
If you and your spouse agree that one of you will stay in the home and the other will find a new residence, you can accomplish this fairly in several ways. Most commonly, the person who is staying will “buy out” the other spouse by paying the value of his or her share. For example, if your house has $200,000 in equity, you can buy out the other person for $100,000 if he or she agrees.
Less commonly, the divorce agreement can establish that spouses will own the property together for a designated time period, such as for five years or until the youngest child graduates from high school. Although this can be challenging, it can also work well if your divorce is an amicable one.
Selling the home
When one person buys the other’s stake in the home, he or she becomes solely responsible for the mortgage and other costs associated with the property. If neither spouse wants to take on this expense, they can decide to sell the home and divide the proceeds. Often, each person uses his or her share to purchase or rent a smaller, more affordable home.